Asian-Focused Funds Focused On China Bounced In October, Soothing Some Recent Pain - HFR

Tom Burroughes

16 November 2015

Asian hedge funds focused on investing in China bounced in October and won back some – if not all – of the losses suffered in recent months, according to figures from Hedge Fund Research.

The HFRI China Index, a broad measure of returns, gained 5.2 per cent in October, the strongest monthly performance since gaining 14.1 per cent in April.

Total hedge fund capital invested in Asian-focused funds fell to $117.5 billion in the third quarter of this year, falling $8.7 billion from the previous three months. This is the largest quarterly asset drop since the final quarter of 2008 when stocks were hit by the financial crisis.

Investor withdrawals in the third quarter were slightly less than $1 billion, while performance-based losses approached $8 billion. Globally, total hedge fund capital fell by $95 billion in the quarter to $2.87 trillion, HFR said.

In the quarter, Chinese-focused hedge funds were hurt because nearly half the stocks on the Shanghai and Shenzhen exchanges experienced trading halts, prompting formal investigations of Chinese securities firms by local authorities. China’s central bank has cut rates in a bid to ward off a hard landing for the Asian economy.

Despite falling -15.4 per cent in Q3, the HFRI China Index has gained 5.2 per cent since January through October, outpacing the Shanghai Composite Index.

Hedge funds investing in Japan fell, with the HFRI Japan Index down 4.0 per cent.